ICA Trade Idea-(Short)

This is one of my favorite trade set ups, the kind that comes to you, offers you a good entry with low risk and high probabilities. As most of you probably know by now, I don't like chasing trades, I prefer to let them come to me. It's called having a trading plan and in this case it usually works out well because of the market dynamics of short term manipulation.

I'm an avid fisherman, I love the fishing shows as well. In many ways trading reminds me of fishing. Down here in Florida, I live about a mile and a half from the ocean so whenever I can, I like to get out and fish. I use to spend a lot of time fishing from friends' boats. When you take a boat out to go fishing, it's expensive, gas, ice, fishing tackle, and the prized live baits that are difficult to keep fresh and healthy.

The point is, just like trading, with fishing you need an edge, especially when it's an expensive boat trip. You can drop 6 fishing lines over the side with your prized live baits that are difficult to catch and keep alive and hope that the scatter-gun technique works, or you can go to a spot where you are marking a lot of fish on the fish finder, drop anchor and set up a steady stream of chum that drifts to the boat and brings the fish to you. When you know the fish are biting, you don't need six lines in the water, you only need a couple and that's when you put out your prized live baits. I've been on fishing trips that used the scatter-gun technique and trips that used the second. The Scatter gun technique leaves you sun burnt, empty-handed and frustrated; fishing smart makes for an enjoyable and successful day.

This ICA trade is more like letting the fish come to you and only deploying your assets when the probabilities are in your favor, like fishing it takes a little discipline and patience, but often pay off.

The only thing I want to mention about ICA is the volume in't huge so keep that in mind if you are trading a larger account and position sizes.

Even if you aren't interested in ICA, the concepts are the same and can be used on any stock you choose.

 On a 5 day chart you can see ICA has not done well in this economic environment, I don't see much that will turn the environment in ICA's favor.

 On a daily chart this clear downtrend channel is the kind of obvious price pattern that often makes for good set ups. ICA just recently broke below that channel on higher volume (probable head fake move).

 Here's the break, volume expanded on the break so some short sellers probably moved in on the break below the downtrend's support trendline.

 Here's the 30 min 3C chart, clearly ICA has been under distribution, there's no reason to think that trend will stop.

 The 15 min chart shows a lot of 3C distribution in to an attempt at higher prices, ICA was being set up for the drop.

 Since the drop the 5 min chart shows a positive divergence, this helps establish the probability that the break below the channel is a head fake move.

What we want to watch for is a move back in to the channel, even better a move above the channel, if you are interested in the trade, try to set some price alerts letting you know if and when this happens. At that point, especially if we get the typical market "pendulum' effect (swinging too far one way and then reversing and swinging too far in the opposite direction) and a move above the channel, we are now in a high probability, low risk environment in which we can short in to strength-all of my equity short positions were entered this same way, all of them are in the green. First step is to set up those price alerts. If you have enough trade set ups like this on your radar, several of them are going to come to you and offer you that high probability, low risk, excellent entry.

I'll be setting alerts on this one.